MR. McCLELLAN: Good afternoon, everybody. The President had a
good discussion earlier today with Republican congressional leaders on
some of our big priorities for the upcoming year. A number of
priorities were discussed at this meeting in the Cabinet Room,
including tax reform, lawsuit reform, the budget, and Social Security.

This afternoon, the President looks forward to meeting with a
bipartisan group of congressional leaders to talk about the importance
of acting as soon as possible on class action reform, and helping to
stop lawsuit abuse in this country.

Then, following that meeting, the President and Mrs. Bush and
Barney look forward to welcoming Miss Beazley to the White House. And
you all will be there for coverage of that at 2:15 p.m.

Q Is this a state arrival? (Laughter.)

MR. McCLELLAN: With that, I will be glad to go to questions.

Q Scott, I know we talked about this earlier, but can you
give us your reaction to the move by Democrats to challenge the result in Ohio?

MR. McCLELLAN: Sure, and we did discuss it earlier. I think the
American people spoke very clearly on election day. And the election
is behind us. The American people now expect their leaders in
Washington to focus on the big priorities facing this country, and to
act on those priorities. It is time to move forward, and not engage in
conspiracy theories or partisan politics of this nature.

Q Follow-up, Scott, on that?

MR. McCLELLAN: No, let me go over here to -- go over here.

Q Scott, on tax reform, you're talking about it now. Does
that mean that you actually intend to do something this year? Because
experts are telling me you have a better chance of getting tax reform
during an election year, because it's so popular.

MR. McCLELLAN: The President wants to move on tax reform now. And
the first step to moving on reforming our tax code and making it
simpler and fairer and making it a code that encourages economic growth
and job creation is to put a bipartisan advisory panel in place. The
President will be ready to move on that very soon.

And that bipartisan advisory panel is going to look at a number of
ideas for meeting the President's principles when it comes to reforming
our tax code, the ones that I just mentioned. And he'll look forward
to seeing what they report back to the Secretary of Treasury, and the
Secretary of Treasury will be making some recommendations to the
President. We're already talking about this issue with members of
Congress and the legislative timetable. And we'll continue to do
that. The President believes this is a very important priority in this
coming Congress.

Q Scott, there have been a couple stories suggesting that the
White House was going to move slowly on tax reform and even on Social
Security reform. What did the President tell Republican lawmakers
today?

MR. McCLELLAN: We're going to move in partnership with members of
Congress to get these priorities done. These are high priorities for
the President. I'm not going to get into talking about legislative
timetables. That's for members of Congress to talk about. They're the
ones who ultimately set the timetable for the consideration of
legislation. But you've heard the President make it very clear that we
need to act now to strengthen Social Security and help our younger
workers realize a greater rate of return on their benefits. And we
need to act now to reform our tax code and make it simpler and fairer.
It's an outdated, complicated mess -- as the President has talked
about. And so those are matters that we're discussing with
congressional leaders of both parties.

Q Now -- I understand you don't have your tax reform
commission yet, or the results of their work, but the Social Security
Advisory Commission's work was three years ago. You've had that in
hand for quite a while, how does the President plan to proceed on
this? How quickly, what does he plan to do to put this issue before --

MR. McCLELLAN: The President is already proceeding on this issue.
He had a meeting a few weeks ago with bipartisan leaders in Congress to
talk about the crisis that we're in when it comes to Social Security.
He had a very good discussion earlier today with members of his own
party on that issue, as well. Social Security is in a crisis
situation. We need to work now to strengthen it and fix it for future
generations. We want our children and grandchildren to be able to
realize the benefits of their own retirement savings. And we want them
to have the best possible system and realize the greatest possible
return on their retirement savings and have some ownership in the
system, as well. Those are important principles that the President
outlined.

We have a unique opportunity to seize this year. The American
people just spoke in an election, and they made it very clear the
priorities that they support. The Social Security -- strengthening
Social Security was a central part of the President's campaign;
reforming the tax code was a central part of the President's campaign.
And now it's time for members of Congress to move forward on these
priorities, and we're going to work very closely with them as we do and
in a bipartisan way. That's what the President wants to do.

Q You often talk about not negotiating with yourself on
specific other things that could be done with Social Security, aside
from personal accounts. Do you recognize, as the White House memo
suggests, that there have to be other things aside from personal
accounts to fix Social Security? And how will you proceed on that?
Democrats on the whole who have dealt with, also say, no one wants to
take a position on any particular thing because, as the late
Congressman Matsui said recently, someone will hang it around your
neck. But what do you do to sit down with members of Congress and get
them to look at and agree on this?

MR. McCLELLAN: The President believes this is one of the biggest
priorities and biggest challenges facing the American people. And he
is committed to doing -- solving this problem in a bipartisan way. We
are open to all ideas and proposals that are consistent with the
President's principles. We are not closing doors, we are looking at a
number of ideas for solving a very real problem. The President has
made his principles very clear that should guide us as we move forward
on reform.

And those principles are that younger workers should have the
option of setting aside some of their retirement savings in personal
retirement accounts. We should not be increasing payroll taxes. And
the President believes it's important that those at or near retirement
see no changes. And the President wants to move forward in a
bipartisan way on this important priority. And that's why we're
reaching out to members on both sides of the aisle who recognize that
we have a very real problem facing us and that now is the time to seize
-- to solve that problem.

Q Can I just follow on that? There have been reports that
the President is not going to come out with his own plan until the end
of February. Is that correct, that it's going to take that long?

MR. McCLELLAN: I would say that there haven't been any decisions
about a specific proposal at this point. I just said that we're in the
process of discussing a number of ideas with members of Congress.
We're listening to ideas that they have, and we're open to all ideas
and proposals that are consistent with the President's principles. We
don't want to close doors at this point; we want to discuss ways we can
solve this problem together. But the first thing we have to do is come
to a common understanding of the situation that we are in and the
problem facing Social Security, and that's what the President is
talking about right now. He's talking to the American people about it,
he's talking with members of Congress about it. He had a good
discussion about some of these issues earlier today.

Q But is it true that you're not going to make these
decisions until -- for a couple months?

MR. McCLELLAN: We're going to discuss timetables with members of
Congress and move forward together, in a bipartisan way, to get this
done. But there have been no decisions made regarding specific
proposals at this point.

Q Scott, can I follow up? The memo, the email memo that Jim
just referenced is from Peter Wehner -- he's the White House Director
of Strategic Initiatives -- and it's making its way around the Hill.
First, this is an authentic memo from one of the President's top aids,
is it not?

MR. McCLELLAN: Yes.

Q In it, he says, that, "we're," the White House, is "going
to take a very close look at changing the way benefits are calculated.
If we don't address this aspect of the current system, we'll face
serious economic risk." So it's fair to conclude the White House is
going to change the way Social Security is --

MR. McCLELLAN: I think what's important in this argument, Terry,
is that we should not be selective in how we approach it and talk about
it to the American people. There are, really, just a couple of options
facing us on Social Security, when you boil it down. We can either do
nothing, and let the current system continue as it is -- and the
current system right now is unsustainable, and workers are facing
either massive tax increases or massive benefit cuts -- or we can act
now and strengthen Social Security, and help workers have a new
guaranteed benefit so that they can realize a greater rater of return
on their benefits. Because right now, under the current system,
younger workers are facing massive benefit cuts if we do nothing.

And that memo says a lot more than just what you pointed out
there.

Q It does, but one of the questions --

MR. McCLELLAN: And I think that the -- well, let me --

Q -- that we have and that a lot of Americans have is, what
does it mean when you say we're going -- we need to act now. And
here's one of the President's top aides saying, it means we're going to
change the way benefits are done.

MR. McCLELLAN: The -- let me tell you what it means. That memo --
or that email is referring to the serious nature of Social Security and
the crisis situation that we're in. It talks about how right now we
have an unfunded liability of more than $10 trillion under the current
system, and that's why we need to act to solve this problem. But the
President is open to all ideas and proposals that are consistent with
his principles at this point. He has not made any decisions.

And the Social Security Commission that was appointed by the
President, and was bipartisan, led by the late Senator Patrick
Moynihan, looked at a number of these issues. And they talked about
the importance of acting to solve this problem now. And they talked
about the benefit of allowing younger workers to invest some of their
own money into personal retirement accounts, and how they can realize a
greater rate of return on their accounts, or on their own savings.

Remember that the Social Security Commission pointed out the great
success story with the thrift savings plan. They called it a "singular
success." That's where federal employees have been able to have a
control over their own dollars and invest those in safe investments and
realize a great rate of return on those investments. And they've seen
huge increases in the return on their investments under that -- under
the Thrift Savings Plan.

Q And one more question about Mr. Wehner's memo. He says --
and this is to conservative members of Congress -- he says, "If we
succeed in reforming Social Security, it will rank as one the most
significant conservative governing achievements ever," and he goes on
to say that -- he says that the Democratic Party is the party of the
past on this issue. "For the first time in six decades, the Social
Security battle is one we can win. And in doing so we can help
transform the political landscape of the country." Is this a political
effort by the President to strengthen the Republican Party?

MR. McCLELLAN: Again, it says more than just what you pointed out,
I would just say.

Q But it also says this.

MR. McCLELLAN: But this would be an important achievement for all
the American people.

Q And for the Republicans.

MR. McCLELLAN: This is critical for our future generations, our
children and grandchildren in helping them have a significant
retirement savings when they do, ultimately, retire. I think that if
you look at some of the information that has been put out, a younger
worker at age 30 right now is facing massive benefit cuts under the
current system. That's why we need to act.

Let me just read to you one other thing to point out the situation
that we're in: "And all of you know, to a greater or lesser degree of
specificity, every one of you know that the Social Security system is
not sound for the long-term so that all of these achievements -- the
economic achievements, our increase in social coherence and cohesion,
our increase in efforts to reduce poverty among our youngest children
-- all of them are threatened by the looming fiscal crisis in Social
Security. This is our obligation to you and, frankly, to ourselves.
And let me explain that. The fiscal crisis in Social Security affects
every generation. We know that the Social Security trust fund is fine
for another few decades, but if it gets in trouble and we don't deal
with it, then it not only affects the generation of the baby boomers
and whether they'll have enough to live on when they retire, it raises
the question of whether they will have enough to live on by unfairly
burdening their children, and therefore, unfairly burdening their
children's ability to raise their grandchildren."

That was February 9th, 1998 in remarks given by President Clinton.
This has been a problem that has been looming for quite some time. We
know that by 2018, that the benefits being paid out are going to exceed
the taxes coming into the system. We know that more people are
retiring -- living longer and retiring, and that there are less workers
to support those retirees. That's the crisis that we face. It's very
real. We should not pass it on to future generations because it only
gets worse over time. And the President is committed to doing this in
a bipartisan way and he's going to listen to ideas from people who are
committed to solving this problem now and not passing it on to future
generations.

Q Does he agree with his top aide that this is a huge
political opportunity for the Republican Party?

MR. McCLELLAN: This is a huge opportunity for the American
people. That's what the President believes.

Let me go back here. John, go ahead.

Q Okay. Two brief questions. First, I feel like this is
almost a deja vu from the morning session -- was immigration discussed
at any of the meetings between the President --

MR. McCLELLAN: No. No, it was not discussed this morning.

Q Second point, I'd just like to get this behind us -- you
may have addressed it earlier, but for days when the President was in
Crawford, there were so many reports that he didn't respond quick
enough to the tsunami and the tragedy of the victims there. It seemed
to me as though I heard the report, and in a very short time on the
same day he was expressing the feelings of he and the First Lady. Has
anyone put out an exact timetable of when he made his statement and
when the report came?

MR. McCLELLAN: I think that that's all well documented. The
United States government was acting immediately in the aftermath of
this grave human tragedy. The United States went into action mode on a
number of fronts. We started forming a core group of nations to
immediately begin moving supplies into the region and distributing
relief and aid to those who were suffering in the immediate aftermath.
And that core group now is going to be merged into the United Nations
efforts. We've been coordinating closely all along with the
international community.

But the reason we were able to establish that core group in the
first place is because of the relationships that the President has
built with leaders in those countries. We were able to come together
very quickly -- in a matter of hours -- with Japan, and Australia, and
India, and then I think Canada and the Netherlands joined the core
group. And that's because of the strong relations we have built over
the last few years. And those countries were able to come together and
quickly get in place a way to distribute aid to those who were
suffering and quickly help try to save lives in the region. So the
President was acting. He didn't have to go out in front of the cameras
to talk about it. He was focused on how can we help those who are
suffering, and how can we get aid to the region as quickly as
possible. And we are doing it on a number of fronts. And you've since
heard from him on many other areas.

Q Scott?

MR. McCLELLAN: Go ahead.

Q Back on the memo, as well as some other questions that have
been raised, some people are saying that memo, in effect, somewhat uses
scare tactics to get the American public to be convinced that it's more
of a crisis state than really what it is. And is that -- what do you
say about -- what does this administration say about that and how
you're trying to convince the American public --

MR. McCLELLAN: I dismiss it. It's talking about the serious
nation of the problem if you look at it.

Q Scott --

Q But, but wait a minute, wait a minute, wait a minute. But
using things -- using key words like you're going to "go up against the
iceberg" and things like that? I mean --

MR. McCLELLAN: Social Security is in a crisis, April. I just
talked about the reason why it is. And when you're talking about more
than $10 trillion being needed to fix the system, I would say that that
is a very serious problem.

Q And then the second question real quick, going back to
Ohio, going back to Mark's question, you talked about conspiracy
theories; people need to let go of conspiracy theories. Well, does the
administration understand that the voting system still in America has
problems, and that is some of the reason why there are people who
consider conspiracy theories? What do you say to the fact that people
are considering issues that the elections process is flawed? You have
machines that are flawed, that you don't have a paper trail. What do
you say about that?

MR. McCLELLAN: How many times were the votes counted in Ohio?

Q Excuse me?

MR. McCLELLAN: How many times were the votes counted in Ohio?

Q But that leads to the fact that --

MR. McCLELLAN: How many times were the votes counted in Ohio?

Q That leads to the fact there was a problem. What do you
say about that?

MR. McCLELLAN: That the decision in the election was very clear.
It was a decisive win, and the American people want us to get about
doing their business. That's what I say.

Go ahead.

Q But when can we get the elections process right for --

MR. McCLELLAN: I'm going to move on. Go ahead.

Q -- for us not to have to keep recounting like Ohio?

MR. McCLELLAN: Go ahead.

Q Scott, Chirac said today he's going to come to Washington
this year to meet with Bush and try to repair the relationship. What
needs to be done? What does he need to say to repair that
relationship?

MR. McCLELLAN: First of all, we are working with the French
government on a time for President Chirac to come to Washington and
meet with the President. The President made it very clear at the
outset of the post-election period that he was going to be doing more
to reach out to our European friends and allies so that we can work
together to solve common problems that we face. There's some big
challenges we have abroad -- not only at home, but abroad, as well.
And we need to continue to move forward on those challenges together.
He talked about a number of the key areas on the foreign policy side
where he would focus in his remarks in Canada, when he made that trip
in late November. And so we're working on a timing for that visit.
The President also looks forward to seeing him in Brussels, as well.
And we'll be talking about the common challenges that we face, and how
we can work together. There are many areas where we already work
together.

Q Are there left-over bad feelings about his opposition?

MR. McCLELLAN: I think everybody is focused on how we can move
forward together.

Go ahead.

Q Scott, it's not just the Democrats who say that the White
House is overstating the crisis. I'm wondering if you could just tell
us about the meeting this morning, what sort of reaction he got, was it
a receptive reaction for the possibility of moving to price indexing,
because the Republicans are split on this issue as well?

MR. McCLELLAN: Corbett, what they talked about was the importance
of having a common understanding of the problem that we face, and the
importance of working together in a bipartisan way to solve this
problem. And they talked about the real opportunity we have this year
to get it done. And I would disagree with the way you stated your
question, because there are a number of Democrats who are committed to
solving this problem because they recognize that the longer we wait,
the worse it gets, and the more of a burden it places on our children
and grandchildren, as I pointed out from one of those Democrat's
comments earlier in the briefing. And we're reaching out to all
members who recognize the problem that exists and asking them to work
with us to solve it.

Q What kind of reaction did he get --

MR. McCLELLAN: Go ahead, Bob.

Q -- did he get this morning as far as the possibility of
switching to price indexing?

MR. McCLELLAN: That wasn't discussed.

Go ahead.

Q Scott, what's the message to that Democrat on Capitol Hill
who agrees with you that there's a problem, but who now questions how
genuine the bipartisanship is when he reads a senior policy memo saying
that the Democratic Party is the party of the past on this?

MR. McCLELLAN: I'm speaking for the President of the United
States, and I just told you what his views are. It's what he has
stated publicly. He wants to work together in a bipartisan way to
solve this very real problem. He is looking at all ideas that are
consistent with the principles that he outlined for strengthening
Social Security. And we're listening to ideas from members of
Congress. That's what the President's message is.

Go ahead.

Q Scott, you have said that Social Security is in a crisis,
it's in a crisis situation, it faces a crisis, faces long-term crisis.
Which is it?

MR. McCLELLAN: A number of people have said that on both sides of
the aisle. A number of leaders and statesmen have said that.

Q Well, is it an immediate problem, or are you facing a
crisis in the future, because if you're facing it in the future but it
isn't one now, then is it accurate to say that we're in a crisis?

MR. McCLELLAN: Based on what I just -- what I laid out earlier, I
would say, it is a crisis, as the President said at the -- at his end
of year news conference last year. When you talk about the facts, I
think that says clearly, it is in a crisis. Look at the demographic
facts: more people are living longer, more people are retiring, there
are less workers to support those retirees, more retirees taking money
out, and there are not enough workers to support those retirees. We
have an unfunded obligation under current law of more than $10
trillion. The President made it very clear that he's committed to
address not only short-term deficits, but long-term deficits, and that
means the unfunded liabilities that we face.

And if you go back and look at the Social Security Commission
Report, it talked about how, beginning in 2018 -- that is not very far
off -- the government will begin to pay out more in Social Security
benefits than it collects in payroll taxes, and then shortfalls will
continue to grow larger with each passing year until 2042, when the
system is projected to become insolvent. That's why we need to act
now.

Q Peter Wehner has been speaking for the administration when
he basically said that you cannot solve this problem with retirement
savings accounts alone and that you have to eliminate wage indexing or
you will suffer economic --

MR. McCLELLAN: What we've said is the personal retirement accounts
are part of a comprehensive solution for strengthening Social Security
for younger workers. As you are well aware, there are a number of
proposals that are out there from the bipartisan Social Security
Commission to members of Congress. They all have a number of different
ideas for how we go about strengthening the Social Security and fixing
this unfunded liability. And we're open to talking about all those
ideas that are consistent with the President's principles. And we're
looking at a number of ideas.

Q But are investment accounts --

MR. McCLELLAN: I'm going to keep moving because we need to go --
well, the President has got a meeting coming up here that I need to get
to, as well.

Q Are investment accounts and the wage indexing mutually
exclusive?

MR. McCLELLAN: I'm sorry?

Q Can you do one without the other and not adversely affect
the economy?

MR. McCLELLAN: There are a number of idea for funding and fixing
this unfunded liability.

Go ahead.

Q Scott, after the President's inauguration, if North Korea
eventually does not come to the six-party talks, is the United States
government prepared to bring the matter to the U.N. Security Council?

MR. McCLELLAN: Well, right now we're focused on working through
the multinational effort in the six-party talks. The President wants
to see a peaceful, diplomatic resolution to the situation in North
Korea. North Korea needs to stop its pursuit of nuclear weapons and
then it can realize -- or then it can become a part of -- or realize
better relations with the rest of the international community. The
President's views are very clear on this. We're continuing to work
with all nations in the region who are sending one, unified message to
North Korea: We want a non-nuclear Peninsula, and you need to abandon
your ambitions for nuclear weapons. That's the message that's being
sent to North Korea. It's in North Korea's interest to come back to
the six-party talks as soon as possible. The President outlined a
proposal -- or we put forward a proposal at the last round of talks for
moving forward. It offered some practical steps for resolving this
important problem.

Q There's an allegation from some Canadian groups that the
President and Mr. Martin talked about prescription drugs and that as a
result of those discussions, the Canadians are now restricting or
curtailing the re-importation of drugs, or the re-exportation of drugs
to the United States.

MR. McCLELLAN: Any such assertion is just nonsense. They did talk
about the importation of drugs. And I think the President's views are
very clear and very well-known when it comes to drug importation. The
President's top priority is the safety of the American people. He's
also committed to reducing the high cost of prescription drugs. That's
why we've acted on a number of fronts to do so. We worked to pass a
prescription drug benefit for our seniors under the Medicare program.
We have worked to speed the approval of generic drugs, and we have also
urged Congress to move forward on medical liability reform. So those
are practical ways we can act now to reduce drug costs. And the
President remains committed to that.

We also had a HHS task force, just came back with a report looking
at the issue of the importation of drugs, and they reported on some
findings and we're willing to move forward with members of Congress on
the findings of that task force. But the President's views are very
well-known when it comes to the importation of drugs. We want to make
sure that those drugs meet the same high safety standards as drugs
approved in America have to meet.

Q Did he press the Canadians to change the way they deal with
sending drugs to the United States?

MR. McCLELLAN: Absolutely not. Any such assertion is nonsense.

Q Scott?

MR. McCLELLAN: Go ahead, Helen.

Q On the question of malpractice, does the President think
there is any price tag you can put on the loss of a limb, through bad
surgery, your eyes, or anything else? Is there any money -- why is it
that he has never, never accused the HMOs and the insurance companies
of jacking up the price?

MR. McCLELLAN: People who have been harmed should have their day
in court. That's what the President believes and that's one of the
first --

Q He believes they can arrive at any price?

MR. McCLELLAN: That's one of the first priorities of his plan to
reform our medical liability laws. There is a very real problem in
this country when it comes to our medical liability laws. As you heard
the President talk about yesterday, there are doctors being forced to
shut down their practice, there are being doctors forced to leave one
state to go to another state before they -- because they can't afford
to keep their practice open. And what you're seeing is that pregnant
mothers, like the one the President met with yesterday, are having to
switch doctors constantly. She went through -- she's on her third
doctor now, a pregnant mother who is soon going to deliver another
baby.

Q Well, why do you put a cap on any kind of settlement?

MR. McCLELLAN: The President believes that there ought to be
reasonable caps on non-economic damages and punitive damages, but the
people who are truly harmed and wronged ought to have their day in
court and ought to have fair compensation for that.

Q Any amount?

MR. McCLELLAN: Go ahead, Sarah.

Q Thank you. Florida legislators are introducing a bill
designed to prevent the Navy from laying up the aircraft carrier John
F. Kennedy, which is home port in Florida. As Commander-in-Chief, how
does the President feel about the Pentagon's plan to retire and would
the President keep the carrier active as a favor to his brother, Jeb?

MR. McCLELLAN: I'm not sure the latest status on that. I think
that's a question probably best directed to the Department of Defense,
but I'll look into it.

Go ahead, Geoff.

Q Thank you. While the Democrats are challenging the Ohio
results on Capitol Hill, Democrats in Washington state have
disqualified any number of military votes in order to win that
gubernatorial election there. Considering that American soldiers are
in Iraq fighting to give those people there the right to vote, the
right to free and fair elections, don't you think we owe it to them to
make sure their votes are counted back home?

MR. McCLELLAN: Every eligible vote ought to be counted. We've
made that very clear in the past.

Q This -- nobody is taking up for these men and women --

MR. McCLELLAN: And certainly our men and women in uniform ought to
have the opportunity to participate in our democratic system, as well,
and have their vote counted, just like everybody else.

Q Will the Commander-in-Chief speak out so that these votes
will be counted?

MR. McCLELLAN: I think our views are very well-known, and that's
an issue that continues with -- between the Republican Party and
Democratic Party in the state.